Due to the surge in imports, the ports of Los Angeles and Long Beach, the largest ports in the United States, are continuing to bear the pressure of a large number of containers entering the ports. At the same time, the ports are seriously congested and a large number of ships are waiting to berth.
The large accumulation of container ships near Long Beach and Los Angeles is having a knock-on effect on the entire container industry. It is an uncertain factor when the market will return to normal. At the same time, shipping companies are planning to reduce trans-Pacific services and change demurrage time.
At present, there are 19 ships berthing at the Port of Los Angeles, and 14 ships are waiting outside the terminal for berths. According to Nerijus Poskus, vice president of shipping at Flexport, in the last week, 300,000 TEUs were waiting to be unloaded at the port. This has a great impact on other markets where there is a clear shortage of containers.
Ships waiting in and near the port
"Congestion is unlikely to continue into the second half of 2021, but it will last at least two or three months, or even four months . In the port of Los Angeles and other matters worse, there are 33 ships waiting, there may be 50 ships within a few weeks While waiting, all these additional ships will also enter the United States. Therefore, these containers will not return to Asia soon.” Poskus said on Tuesday.
Recent Import and Export Situation of the Port of Los Angeles
Currently 19 ships are berthing, with an average time of 7.5 days
There are 14 ships waiting to berth
Part of the voyage to the US West was cancelled
According to Lars Jensen, CEO of Seaintelligence Consulting, the large-scale accumulation of ships on the west coast of the United States is having an impact on shipping services. He pointed out that Hapag-Lloyd will announce the cancellation of 21 Asian and North American routes in February this week. Between voyages.
Jensen said it was a decision that had no choice due to delays.
In addition, due to increased congestion at the Los Angeles port, which has affected delivery guarantees, CMA CGM appears to be shutting down its transpacific express service.
According to Alphaliner, the French shipping company has closed its trans-Pacific premium SEA-X service and plans to open a new route between China and the West Coast competing port: Oakland and Seattle.
If the container fails to be shipped out at the Los Angeles terminal before the agreed date, the SEA-X service will provide the shipper with a refund.
Alphaliner pointed out: "Obviously, the serious congestion at the port of Los Angeles makes it difficult for CMA CGM, in fact, almost all shipping companies to guarantee on-time delivery."
It is reported that the SEA-X service operates outside the Ocean Alliance’s trans-Pacific network and has deployed 6 ships with a capacity of 3,700-6,300 teu. Alphaliner learned that three of the ships have been transferred to the new Golden Gate Bridge service. The port call will be Shanghai-Yantian-Oakland-Seattle-Kaohsiung.
The last stop of the SEA-X service will be the CMA CGM Elbe round, which will arrive in Los Angeles on February 13.
The SEA-X service was launched in the second half of last year. The target customers are shippers who are willing to pay extra to avoid traffic congestion in Southern California. However, according to Simon Heaney, senior manager of container research at consulting firm Drewry, this congestion has spread since then and could lead to the complete end of advanced services in the industry.
"Congestion has created demand for high-end products, but the problem has deteriorated so fast that it may be difficult to fulfill the promise and be forced to refund the guaranteed shipping part (at least one carrier will bear a 200% refund )."
Change the free time of demurrage at U.S. ports
From March 1, 2021, Hapag-Lloyd will modify the free time for import demurrage in the United States as follows:
▍U.S. West Coast Port: Los Angeles/Long Beach
▍American West Coast Port: Oakland
▍Port of Jacksonville, USA (Jacksonville):
▍Port Newark：MAHER TERMINAL
Legend:
DOD = Day of Discharge DOD
WD = Working Day for the USA (excludes Sat, Sun, Bank Holiday)
Ships from Asia to Europe have recently undergone some new changes. Some shipping companies have cancelled multiple voyages, some have added new services, and more and more bulk cargo ships are carrying containerized cargo.
According to reports, HMM will put in an additional 5000 TEU cargo ship on the European route from Busan to Hamburg at the end of this month to meet the shipper’s cargo delivery requirements.
In addition, the shipping company China United Shipping (CU Lines) announced its first direct European route, maiden voyage on February 6, will provide independent services to the Nordic region and deploy a series of small feeder ships.
▍The 2M Alliance will cancel several Nordic voyages in the next week or two
The shipping company will cancel multiple flights to Northern Europe during the Spring Festival next month. This is a blow to the troubled cargo owners because they have paid a huge price to secure space in the voyage.
2M alliance partners Maersk and MSC plan to cancel three public voyages from Asia to Northern Europe in the 5th-7th week. One of the ships will be allowed to be postponed until next week, and the existing reservations will be kept. Ocean Alliance member CMA CGM will also skip three loops in the same period.
MSC said, “Due to the slowdown in demand during the Spring Festival and the severe congestion in the entire supply chain, it is necessary to take measures to cancel sailing.”
Maersk advises its customers that in order to cope with severe port congestion and container restrictions, it is necessary to use suspension to improve the reliability of shipping schedules, so as to release these services to restore planned shipping schedule measures.
Suspended voyages: Maersk Herrera on the AE55/Griffin loop scheduled to depart from Shanghai on February 11; Maersk Enshi (AE6/Lion) scheduled to leave Busan on February 13; and departure from Ningbo on February 15 Estelle Maersk (AE7 / Condor).
A shipping company source said that he believes that 2M is more about slowing down the overheated supply chain and alleviating the pressure of congestion in the Nordic containers and ports.
"I can only represent our ships. During the Spring Festival, they are all fully booked." The source said, "In addition, too much cargo has been dumped recently. This cannot be a problem of reduced demand, so I guess , They want to restore a certain timetable by cutting voyages."
Indeed, Simon Sundboell, the founder of the liner database eeSea, said that the reliability of this route is worse than what we have seen in a long time.
He added: "These suspensions are necessary and restoration measures need to be arranged. They are not meant to consume capacity."
At the same time, according to the latest investigation by Container xChange, the serious container shortage crisis is alleviating. Although the container availability index (CAx) in December hit a record low, Shanghai has improved significantly this month.
"In January, the availability of 40-foot-high cubic containers increased by 37.5%, while the standard 40-foot-cubic container even increased to 200%. CAx showed a positive trend for shippers and freight forwarders looking for containers in Shanghai. With the increase in container availability Significant increase and Shanghai is returning to normal levels.” said David Amezquita, head of data insights, adding that similar situations have occurred in other major hubs in China.
▍The empty container release time will be extended from 7 days to 10 days
It is reported that Hapag-Lloyd will take temporary measures in order to optimize the supply of containers and meet customer needs during the upcoming Spring Festival. From now on, the empty container release window in Mainland China will be extended from the current 7 days to 10 days.
The empty container pick-up time at all Chinese ports has been adjusted from 7 days before the estimated sailing date to 10 days, which will take effect from now until January 31, 2021.
From February 1, 2021, it will be further extended to 14 days before the estimated sailing schedule until further notice.
The specific box types at the following special locations will be kept for 10 days and are subject to change without notice.
Shenzhen: 20' Dry
Ningbo: 40' Dry, 40'HC
Shanghai: 40' Dry, 40'HC
▍More and more containerized goods are cancelled and switched to other types of ships
Chartering expert Ahlers said that the rebound in bulk cargo transportation will bring benefits to secondary ports and short sea shipping. The company said: "New opportunities for bulk carriers, multi-purpose ships and ro-ro ships are emerging."
According to reports, last week, freight forwarders increasingly wanted to use multi-purpose ships to avoid a series of delays and cost issues, which disrupted Asia-Europe container trade-in some cases, they gave up boxes, and I chose bulk groceries.
The "crazy" of container trade drives more Asian goods to other modes of transportation
In addition, the de-containerization trend seems to be gaining momentum on intra-Asia routes. On some routes, bulk commodity shippers accustomed to the lowest freight rates suddenly face bills much higher than in previous years.
Ahlers said that in Southeast Asia, cargo that has been shipped in containers for decades is now being transferred to bulk carriers.
Chartering business manager Senthil Nayagam said: “Due to the shortage of containers and high freight rates, goods such as sawn wood and plywood are turning to bulk general cargo ships.”
He said, for example, the cost of exporting plywood from Malaysia to Colombo has increased from US$400/TEU to US$1,025. “Therefore traders hope to transport them in bulk in the next three to four months until the situation improves. "
Another example is the shipment of goods from China to Russia. Mr. Nayagam said that Ahlers' original plan to reach St. Petersburg or use maritime rail services had to be cancelled and switched to other ports and offshore services.
He added: “Freight forwarders are forced to find unconventional options, such as transporting goods to a triple container terminal, and then looking for different short-sea solutions, trying to use smaller coastal bulk cargo vessels to transport the goods to the final destination. Land."
For many industries, transportation costs are not the only consideration in determining mode switching.
Mr. Nayagam said: “Inventory costs, potential fines related to late delivery, and factories' urgent need for raw materials to keep them running are all factors. For example, summer fashion needs to be listed in stores in time.”
"We believe that the container market situation will return to normal again, but it is not yet certain when it will return to normal. At the same time, we will continue to see more and more'traditional container' cargo shifted to other modes of transportation, including bulk cargo."
Container xChange said that the shortage of container equipment that has lasted for several months is expected to end because the container availability index (CAx) is undergoing positive changes.
According to Container xChange analysis, the Chinese New Year may become a turning point , with the 20-foot and 40-foot dry cargo index increasing to 0.34 and 0.37 respectively, indicating that the availability of empty containers is much higher than last month. CAx data comes from millions of containers tracked by Container xChange. Container xChange CEO Johannes Schlingmeier said: “An index of 0.5 indicates market balance, and a value below 0.5 indicates a shortage of containers.” Container xChange pointed out that although the latest data in January was well below 0.5, indicating that there is still a shortage of container equipment, but 20 feet and The 40-foot container data has begun to approach the normal container shortage level in China's main export markets.
David Amezquita, the company's director of data, said:
Compared with December 2020, the availability of 20-foot containers in January 2021 has increased by 37.5%, and the availability of 40-foot containers has increased by 200%, which is a positive trend.
Data from xChange shows that in the past few months, there has been an extreme shortage of containers across China. In Shanghai, which has always been in short supply, the index reached a record low in December 2020, of which the 40-foot container availability index was only 0.13. The company said that as China's container manufacturing plants are running at full capacity to expand production capacity, coupled with the shipping company's efforts to transport empty containers back to China, the Chinese New Year may become an important turning point.
With the substantial increase in container supply, Shanghai Port's container availability index is returning to normal levels. Other ports in China are also undergoing positive changes. Taking Qingdao Port as an example, the availability index of a 20-foot container even reached 0.5. The container availability index of other major Asian hub ports such as Singapore Port, Navassiwa Port and Port Klang also showed the same trend. Compared with December 2020, the availability index of standard containers at the Port of Singapore in January 2021 has increased by 58%, Port Nawahiwa has increased by 35%, and Port Klang has increased by 54%.
There are signs that the container availability index will remain stable in the coming weeks. Until mid-February, the availability of 20-foot boxes will stabilize at around 0.35, and the availability of 40-foot boxes will stabilize at around 0.38.
In the past two months, the cost of transporting goods from China to Europe has more than quadrupled, hitting a record high, due to the pandemic disrupting global trade and the shortage of empty containers.
Data from shippers and importers show that the freight for transporting a 40-foot container from Asia to Northern Europe has risen from approximately US$2,000 in November last year to more than US$9,000.
Lars Jensen, CEO of maritime consulting company SeaIntelligence, said that the reason for the increase in freight rates is the market's competition for limited resources-containers.
In the first half of 2020, due to a sudden slowdown in global trade due to the epidemic blockade, shipping companies have suspended large-scale shipping and thousands of empty containers are stranded in Europe and the United States. In the second half of the year, when Western countries' demand for Asian-made goods rebounded, competition among shippers for available containers pushed up freight rates.
John Butler, Chairman of the World Shipping Council, said, "The freight volume has dropped from a sharp decline to soaring to the highest level in history, and the effective handling capacity of the terminal has exceeded the upper limit."
He added that the congestion in the port has caused freight rates to rise, and shipping companies charge additional fees to compensate for the longer waiting time.
British freight forwarding company Edge Worldwide CEO Philip Edge said that some shipping companies charge US$12,000 per container, much higher than the US$2,000 in October last year.
The British Household Electrical Appliance Manufacturers Association stated in a statement, “According to member companies’ disclosures, shipping costs have increased by more than 300% since 2020. Especially for some commodities, the increase in shipping costs has exceeded the net increase Profit. Therefore, these costs will have to be passed on to the end user."
The owner of a leisure goods importer in Manchester said that the shortage of containers is having a “huge impact” on his business, and some orders placed in November are still waiting to be shipped. "The question is, is it to pay $12,000 now and pass the cost on to the customer, or to wait at the risk of exhausting inventory?"
Economists say that such interruptions and delays are beginning to affect global supply chains. Neil Shearing, chief economist at Capital Economics, said that "transportation pressure is accumulating and may increase further."
A recent survey by IHS Markit found that in December last year, the delivery time of manufacturing suppliers in the Eurozone reached the worst level since the peak of the pandemic lockdown in April. Shipping delays and general commodity shortages were "widely mentioned" by suppliers. .
The companies surveyed stated that they are consuming inventory of raw materials and semi-finished products, resulting in a decline in inventory.
Bert Colijn, senior economist at ING, said that "supply shortages and rising freight rates may slightly curb trade growth."
On the occasion of the Chinese New Year in February, the Asian manufacturing industry slowed down. Shipping companies hope to use this time to solve the problem of increasing backlog orders, which will temporarily cool freight rates.
However, BIMCO chief shipping analyst Peter Sand said that the shortage of containers may continue for a long time in 2021. Although the shipping company has ordered new containers, in his opinion, such a move is "too small and too late."
Lars Jensen also believes that although freight rates may drop slightly, "there are still a lot of goods waiting to be transported."
John Butler pointed out that only when epidemic-related restrictions are reduced and people have more diverse service choices, the pressure on the maritime supply chain can be alleviated, but no one can say when it can be improved.
The air cargo market has ushered in a new year, but there is no sign of cooling. International transportation activities usually weaken after the holiday season, but due to the unusual air transportation mode and the severe shortage of air transportation caused by the new coronavirus pandemic, demand and freight rates remain high.
The logistics company expects that the air cargo volume will not decline before the Spring Festival, because the manufacturer plans to continue operations during the traditional holidays.
The latest comprehensive statistics of World ACD and CLIVE Data Services in December show that compared with 2019, air cargo volume has fallen by only 3.7% to 5% respectively. These data show that the air cargo industry has recovered a lot since it bottomed out in May last year, when demand dropped by nearly 40%.
The demand for air transportation is largely driven by continuous inventory replenishment, the inventory-to-sales ratio of consumer goods is close to the lowest level in history, and a saturated marine container market. Analysts and logistics providers said that the congestion of ports and railways and the shortage of empty containers continue to push up shipping prices and cause serious delays, especially for main routes from Asia, which promotes a further increase in aviation demand.
The goods sought for air transportation include automotive equipment, consumer goods purchased online, and medical supplies related to COVID-19. Airplanes are also used to transport the new crown vaccine, because a large number of vaccines are transported by land, and sometimes only a few containers are needed for each flight, so it is not clear how many ordinary goods they replace. Nevertheless, when the capacity is tight, the vaccine will be given priority to board the plane.
San Francisco-based freight forwarding company Flexport said in a customer advisory update report that the remaining demand for game consoles and smartphone product releases in the fourth quarter will increase capacity constraints by mid-February.
Bruce Chan, vice president of global logistics at investment bank Stifel, said in a monthly comment that shippers are also more inclined to use air operations as an inventory buffer because their forecasting models have been completely overturned by the epidemic. He wrote: “Predicting consumption patterns and when they will stabilize is a huge fear, and the path forward is hardly linear, especially when the new coronavirus reignites and the government further implements blockades and border closures.”
In addition, many Chinese manufacturers announced that they will continue production during the Lunar New Year period from February 12 to 26. Factories are usually closed for 10 days or longer so that workers can celebrate with their families, but because the Chinese government encourages workers to celebrate the New Year on the spot, many factories will continue to operate this year. Flexport said this could create a backlog, as many freighter flights were cancelled a few weeks ago due to the expected full transport. Any backlog will depend on whether the factory continues to produce or take vacations at home.
The demand for air freight is so strong that experts predict that by the end of March the market will return to the level before the epidemic. This trend is in sharp contrast to the passenger traffic of the aviation industry, which is expected to remain sluggish until vaccination becomes more common in the second half of the year. Even then, the recovery of international travel may be slower, which means fewer aircraft for long-distance trade. Aviation industry officials said they don’t expect a full recovery until 2024.
Globally, freight rates are more than twice what they were a year ago, and freight rates from China to Europe and the United States are 2.5 times what they were a year ago. According to data from digital sales platforms, market information services and freight forwarders, the aircraft on these routes are full.
According to World ACD data, the average freight rate soared by 80% in December last year, from US$1.80 per kilogram to US$3.27 per kilogram, the highest year-on-year increase since May last year, but it fell by 10% since January this year.
Freight rates are under tremendous pressure, because although more all-cargo operators have added freighters and flights, global capacity is still about 20% lower than 2019 levels. The main culprit is the insufficient supply of wide-body passenger aircraft on international routes, most of which are still grounded due to the poor travel market. In fact, with the strict implementation of travel restrictions, airlines will reduce flights in the first quarter. For example, Air Canada and WestJet suspended 25% and 30% of their system capacity in the first quarter.
According to data from the International Civil Aviation Organization, the global all-cargo fleet increased by 22.4% to 673 aircraft in 2020. Airlines continue to increase capacity, including improved aircraft from passenger airlines, but this is not enough, because the space shortage is three to four times the decline in demand, and the gap may be even greater in the short term.
In the past month, Qatar Airways has added three Boeing 777 freighters to its fleet, and China Airlines and AirBridgeCargo have each added a factory-built aircraft. Swiss International Air Lines has added Seoul, South Korea and Lima, Peru to its cargo network. The flight from Zurich will be operated by a 777-300 extended-range passenger aircraft dedicated to cargo. The flight from Zurich will be operated by a 777-300 extended-range passenger aircraft dedicated to cargo.
In the past year, many freight forwarders have greatly increased the use of dedicated charter flights to ensure that they can provide transport capacity to their customers. German logistics giant DB Schenker significantly expanded its private aviation network last week. Now it has two routes, connecting Europe, Asia and North America for the first time. The cargo management company controls a total of 43 Boeing 747 or 777 freighter flights every week-equivalent to the space of a 135 wide-body airliner. Munich Airport is the hub for DB Schenker's intercontinental cargo between the United States and Asia.
Equipment shortages, strong demand, and soaring freight rates in Asia and Europe have almost run through the entire Christmas-New Year holiday. Freight forwarders and carriers are almost unlikely to see market conditions ease before the Chinese New Year in February.
According to data from the Baltic Daily Freight Index (FBX), spot prices from China to Northern Europe reached an incredible $7,701 per TEU on January 15 , a year-on-year increase of 268%.
The freight rate from China to the Mediterranean region also drew the same curve, and the rate per FEU7496 USD increased by 203% over the same period last year.
Data from Xeneta, an internationally renowned freight benchmark and market analysis platform, shows that since the end of October 2020, spot freight rates in Asia and Europe have risen almost vertically, from US$1,164 per TEU to US$4,191 on January 2, 2021.
These indexes reflect the total rate of trade payments, and shippers are also reporting that freight forwarders have given them eye-popping prices for Asia-Europe freight. A shipper told reporters that, last week, a freight company reported a one-week Asia-Northern Europe freight rate, which reached US$13,000 to US$16,000 per FEU.
The shipper said: "I know the capacity of this route may be more tight than other routes, but such prices are still too crazy."
From February 12th, China will begin to celebrate the Lunar New Year, and factories are usually closed for three weeks around the Spring Festival. However, since the beginning of this year, there have been various mixed reports from Chinese manufacturers. Some factories will cancel holidays in order to cope with the backlog of orders, and some factories will take longer holidays.
This uncertainty makes the capacity management of carriers more difficult. The sea intelligence agency (sea intelligence) recently stated in a newsletter that during the three-week Spring Festival beginning at the end of January, the carrier has so far announced only seven cancellations of the Asia-Europe route. The shipowners have announced that they will cut their total capacity by 6% to 13%, compared with 40% in January last year.
The newsletter pointed out that shipowners usually announce cancelled flights six to eight weeks before the Spring Festival, putting people under pressure of "time pressing". However, there may be other reasons behind the silence of the shipowner.
A Maersk spokesperson said that although the demand outlook for this year is still limited, the current freight purchase model and the supply of container equipment and ships are only temporary. Maersk expects that demand will "normalize" in the first half of the year, and plans to reduce voyages around the Spring Festival to rebalance the flow of containers. The spokesperson said that stocks in the US and European markets have basically been replenished, and the introduction of vaccines "will also ease this situation."
For the time being, we still see no signs of weakening demand
But obviously not everyone agrees with Maersk's view. Dominique von Orelli, Executive Vice President and Global Head of Ocean Freight at DHL Global Forwarding, said that continued strong demand will keep container freight rates high in the first quarter of this year run. He said that " this extremely strong demand momentum" showed no signs of abating .
Von Aurely said, "During the Spring Festival, freight rates may drop slightly, but the overall upward momentum should continue until March or even the second quarter." He added that any shipment exceeding the agreed minimum quantity commitment (MQC) The volume will increase the price.
"Now if you go to a retail store in Germany and want to buy a sports jacket, or go to IKEA to buy a bed, or go to a furniture dealer to buy a chair, they will give you a lead time of 12 weeks or more because the inventory has been It’s emptied.” The source added, “Most companies are trying to replenish inventory, but at the same time, the strong demand has not been reduced. Therefore, it is still difficult to increase the inventory to the customer’s demand. It will take some time to achieve The state of supply and demand balance, so we predict that demand will not stabilize until March or April."
Rolf Habben Jansen, CEO of Hapag-Lloyd, also holds the same view. He said in the latest market report in late December last year, "Two months ago, I said that (high) demand will continue until the Chinese New Year. The traffic will drop."
He added: "Today, I have to honestly say that we may still have to deal with very high transportation volumes in the future. After all, the bottleneck that cannot ease the current capacity shortage is not only in the logistics link, but also in the production link. There is still a lot of work to be done. I’m afraid it will take some time to solve the bottleneck. China Spring Energy allows us to breathe in two to three weeks. But not everything will be resolved within this time."
Since the peak of the third quarter of 2020, with the high demand in Asia and Europe, China has faced a serious shortage of empty containers. The executive of the European logistics industry said that the problem of tight container supply will continue into the second quarter. He said: "The second quarter is expected to see the relief of the new crown epidemic. By then, there will be more labor supply in warehouses and terminals in Europe and other destinations, which will accelerate the flow of containers."
There are still two or three weeks to go before the Spring Festival holiday. The peak of shipments a year ago has been urgently reached, but the lack of compartments and containers and trailers that continued from last year to this year continues, which makes export and forwarding companies miserable.
Due to the special market situation this year, the epidemic began to rebound in December and entered the new year. Major exporters and freight forwarders have already geared up to plan ahead. Affected by the epidemic, this year is different from the past, but the same is still lack of space. Lack of cabinets and trailers!
It can be described as:
Grabbed a space and lacked boxes;
The box was grabbed and there was no space;
The compartments are all grabbed, and there is no trailer...
Small containers are becoming a key factor affecting the global trade industry chain. At present, in the field of foreign trade, containers, spaces and trailers are the hurdles that cannot be crossed in the international logistics chain, and it has become a consensus that "the one who wins the container wins the world".
Since July last year, my country’s exports have continued to pick up. With the increase in replenishment demand from overseas customers, the export volume has risen sharply. Both the shipping market and the China-Europe freight train market have seen shortages of containers, soaring freight rates, and delayed turnover.
Statistics from the China Container Association show that China's export containers are mainly satisfied in two ways: unloading old containers after unloading at ports, and new containers made by Chinese container manufacturers.
my country can only return one for every 3.5 containers exported. A large number of empty containers are backlogged in the United States, Europe, Australia and other places, and there is a shortage of containers in Asia.
At present, there are dead congestion and slow operations in ports around the world. Containers that can usually be returned within 60 days are now delayed to 100 days, and the cost of renting containers has also increased by about 150%.
Zhang Jun, deputy general manager of Qingdao Port QQCT, once said: Under normal circumstances, if 1,000 containers are needed in the current period, there will usually be 1,200 to 1,300 containers waiting at the port. However, in the current situation where containers are in short supply, there may be only 800 to 900 containers at the terminal. .
According to a survey on China's shipping industry , over 90% of container companies said that the lack of containers will continue for 3 months or more . Therefore, the shortage of containers still exists in the short term, and the freight rate in the container transportation market will continue to be affected by the shortage of empty containers. Container companies need to take effective measures to deal with the shortage of containers.
▍In addition to the hard to find a box, there is also "a cabin hard to find"
Major freight forwarders have launched fierce bidding wars to secure containers and space. According to reports, several shipping companies have already started the first and second rounds of bidding, and the bidder with the highest bid can obtain the right to ensure the cargo loading and transportation this month.
According to foreign media reports, according to the news with the Chinese freight forwarding company, the shipping company is quoting the available space for flights departing from Shanghai, Ningbo, Qingdao and Yantian at the end of January, and the price per 40-foot high container to the UK is less than 16,000 US dollars. , The quotations of Rotterdam, Antwerp and Le Havre are less than $10,500 per 40-foot high cabinet, which is unlikely to succeed.
Most freight forwarders said that after the Chinese New Year holiday starting on February 12, the freight rates from Asia to Europe will fall but will not collapse, especially when shipping companies have rarely cancelled only a few voyages so far this year. under.
In addition to high freight rates, freight forwarders are facing the real challenge of "bursting cabins". The freight forwarder who can't pay the high price can't book the space at all, and the long-term customer's cargo cannot enter the port and board the ship on time.
Due to insufficient space, shipping companies will detain many of the space booked by freight forwarders until the next flight in order to maximize their benefits. For large forwarders, the loss caused by dumping containers may still be within the tolerable range. For those small and medium freight forwarders who rely on a few large customers themselves, the disadvantage of insufficient competitiveness in this case may directly lead to difficulties.
As the "middleman" between the customer and the shipping company, the flood of cabins at the end of the year was enough to make the freight forwarding "messy in the cold wind" gradually.
▍Finally , one thing to mention is to be wary of drivers without tow trucks.
Seeing that the Spring Festival is approaching, the domestic epidemic has become more serious during this period. Many regions across the country have issued the "non-essential non-return home" initiative. So far, 31 provinces and cities have strengthened their prevention efforts.
But for tow truck drivers, they travel at the port all year round, and it is rare to reunite with their families throughout the year, so most drivers will choose to go home! This again makes shipping face a huge problem, and drivers will soon be insufficient!
Although there will be a shortage of drivers during the Spring Festival in the past, this year due to the impact of the epidemic, the shortage of drivers may not only become more serious, but it may also come earlier!
At present, there are a total of 72 medium- and high-risk areas in China, and almost all returnees from medium- and high-risk areas need nucleic acid testing + home isolation.
Take Henan Province, a large populous province, for example. During the Spring Festival, the policy is: for personnel entering Zheng from high-risk areas, their personal health codes are marked as red codes, and the measures of "centralized isolation for 14 days + 2 nucleic acid tests + 1 serum test" will be implemented. Take care of yourself. If the quarantine period expires and there is no abnormality in the test results, a release form will be issued, and the personal health code will be adjusted to a green code for normal and orderly flow. If the detection result is abnormal, the control measures shall be implemented in accordance with relevant regulations.
With such strict control measures, if drivers choose to return to their hometown to reunite with their families, they must start preparations in advance, and they must be quarantined back and forth to extend the time for drivers to return home.
If there are not enough drivers, the efficiency of export trailers will be seriously affected, and the price of land transportation will rise accordingly. During the Spring Festival in previous years, the price of land transportation will probably increase by 20%-50%. This year, it is likely to double or even several times like ocean freight!
Flexport, a freight forwarding company based in the United States, said that it is now necessary to produce 500,000 new 20-foot containers to alleviate the current disruption to the global container supply chain due to lack of container equipment.
Nerijus Poskus, Flexport's vice president of global shipping, estimated in an interview with Bloomberg that hundreds of thousands of new containers will be needed to meet current market demand.
Nerijus Poskus told Bloomberg, “In order to alleviate the current container supply chain dilemma, at least 500,000 new containers need to be built around the world, which is equivalent to the number of 25 largest container ships in the world.”
The vice president of Flexport also said that the surge in demand has also caused the spot freight rate for a standard container across the Pacific to quadruple. This figure does not include additional costs related to equipment and insurance premiums to guarantee loading.
Due to the tight container supply chain, Volkswagen AG was forced to cut its production plan for the world’s largest car factory in Germany, and warned that the tight supply may spread to the world; Honda Motor Co. is also cutting five times. The output of the North American plant is difficult to purchase automotive chips.
Rob Subbaraman, global head of macro research at Nomura Holdings in Singapore, said, "Supply bottlenecks seem to be more pronounced in the United States and Europe, as their supply delivery time has recently slowed down again." "This is not good for Western industrial production and should lead to inventories. A steeper decline and put upward pressure on output prices."
"Anyone who pays for shipping in 2020 knows that the true cost of shipping is even much higher than the recent increase in shipping. We expect this number to only increase in 2021."
Maersk: Congestion in the container supply chain will not improve in the near future
A Maersk executive said that in the reality of strong demand, there is almost no excess capacity in container ships , and the congested supply chain can hardly be alleviated.
Maersk Line’s parent company AP Moller-Maersk A/S Latin America and the Caribbean Senior Vice President Fan Chuyan Robbert van Trooijen recently stated that the demand for container shipping services may still remain at an unusually high level in the near future. With almost no remaining container capacity, carriers and shippers will have to continue to adapt to the tight situation of the container supply chain caused by the pandemic.
Fan Chuyan also said that factories in China and other parts of Asia have increased production because their customers in other parts of the world are rebuilding inventory that was depleted due to the suspension of production at Chinese factories early last year.
He also introduced that at the same time, the current idle capacity of the container shipping industry is at a historical low of about 1.5% , so there will be almost no additional capacity to be used in the market in the short term.
In fact, according to the latest data provided by Alphaliner, as of December 21, 2020, the global proportion of inactive containers is only about 1% , taking into account that it includes ship docking maintenance, installation of desulfurization equipment and ballast water systems, etc. Situation, this is already the lowest level in history.
He said: "In the foreseeable future, the current supply and demand situation will not change significantly, because there is not enough new ship order capacity." "This (tight supply chain) situation may continue for some time."
The executive said that compared with the existing fleet, the current capacity ratio of new container ship orders is at the lowest level in history.
Due to the imbalance between supply and demand, we have also seen a sharp increase in container freight rates recently. Fan Chuyan refused to disclose his views on recent freight rates.
With the arrival of the Chinese Lunar New Year, workers need to return to their hometowns to visit relatives. After the Spring Festival holiday in February, the flow of Chinese manufactured goods to other parts of the world may temporarily stagnate. But he also emphasized that demand may remain high.
For example, Xinde Maritime.com has placed an order for 18 ships of 24000TEU! Will the shipping fee be reduced? According to the article, due to the relatively sluggish state of the container shipping industry in recent years and the uncertainty about future fuel selection, container shipping companies and shipowners have previously maintained a more cautious attitude towards ordering new ships.
According to data provided by Alphaliner, Maersk, the world's largest container shipping company, has been busy in business transformation in recent years, and currently does not have many new ship orders.
Fan Chuyan said that Maersk will not have a significant new capacity put into operation in the future , but will focus on opening up various nodes and improving the flow of goods on land and sea.
He also revealed that Maersk hopes to expand its logistics business in the region through organic and acquisition. He declined to say which acquisition method the company will consider. In the past few years, Maersk has made investments and acquisitions in areas such as customs declaration and inland logistics.
Brazil is a major exporter of commodities, and China's demand for these commodities is very strong, the most famous of which are soybeans and iron ore. These commodities are usually transported by dry bulk carriers, and Maersk does not use dry bulk carriers in its fleet. But Brazil is also a big buyer of Chinese manufactured goods shipped in containers.
Fan Chuyan introduced that the current supply of containers on this route is severely short, and the strategies adopted by some customers to bypass congested nodes have exacerbated this situation. He said that "some customers book two or three different" carriers to make sure they can move goods into or out of the country. "
He said that the company is working closely with some major customers to make operations smooth, including implementing a new system that will ensure that they have space and prevent overbooking.
Super congested Port of Los Angeles
Satellite AIS ship tracking data shows that currently about 30 container ships are parked at two ports near Los Angeles waiting for berths, and there are about 20 before Christmas. Los Angeles is the busiest gateway for American goods trade.
Logistics media American Shipper recently interviewed Kip Louttit, executive director of the Southern California Shipping Exchange, to understand the latest situation of ship congestion in San Pedro Bay.
He said that as of noon on Wednesday, 91 ships were in the port, of which 46 were at berths and 45 were at anchorages. Among them, 56 are container ships, 24 are at berth and 32 are at anchor.
It also introduced that several container ships will be anchored at the port on Friday, and the total number of anchorages will reach 37. But Louttit said, "From January 1 to today, there has been no significant change."
Louttit confirmed that the ship has actually filled up all available anchorages near Los Angeles and Long Beach. Ships also occupied 6 of 10 emergency anchorages near Huntington, south of San Pedro. If all the emergency anchorages are also occupied, then the newly arrived ships will have to go deeper offshore for drifting.
Yesterday, the captain of a container ship about to go to the Port of Los Angeles said that our ship had just left the Port of Busan and received news that it was expected to wait at least 4-5 days at the anchorage.
The fact that so many ships are anchored in the waters of the Los Angeles port also reflects the degree of congestion in the container supply chain. The last time so many ships anchored there was between 2014 and 2015, when the workers of the Port of Long Beach in Los Angeles went on strike for a period of time.
"On March 14, 2015, there were 28 container ships at anchor on the highest peak at that time. Looking at it now, this record has been broken," Loutitt said.
In a warning letter issued to customers this week, Germany’s largest container shipping company Hapag-Lloyd reported: “Due to the surge in imports, all terminals in (Los Angeles/Long Beach) continue to be crowded. (This) is expected to continue until February. ."
Hapag-Lloyd also stated that “the staff at the terminal is limited” and claimed that this is related to COVID-19. "This labor shortage affects a series of operations such as TAT (turnaround time) truck drivers at all terminals and transfers between terminals."
Hapag-Lloyd also confirmed that the congestion problem has spread beyond California ports. The company reported that “serious congestion” has also occurred in Canadian ports. “The berth congestion at Maher Wharf and APM Wharf (New York and New Jersey Ports) also affected all routes, and ships had to face several days of delay after arrival.”
In addition to the three main orders of "equipment handover form", "station receipt" and "handover record", container transportation usually includes the following 10 types of documents.
(1) Booking form
The booking list is prepared by the shipping company or other carrier when accepting the shipper's (or shipper's) booking, according to the shipper’s verbal or written application, recording the cargo consignment, and used to arrange container cargo transportation. The main contents of the documents and booking list include: cargo name, number of packages, packaging style, mark, weight, size, port of destination, settlement period, transshipment period, whether it can be transported in batches, transshipment, etc.
(2) Booking list
The booking list is a list of the delivery and loading places of different goods drawn by the shipping company or its agent according to the contents of the booking form.
(3) Packing list
The packing list is the only document that details the name, quantity and stowage of the goods in each container. When the container is used as a unit for transportation, the container packing list is an extremely important document. It is the basis for cargo declaration, handover, etc. The weight of the cargo and the container recorded on the document is used to calculate the ship’s draught difference and stability. Basic data of sex. When cargo damage or cargo difference occurs, it is also one of the original basis for handling accident claims.
(4) Annotation list
When the container terminal yard or container freight station receives goods, if the goods are found to be abnormal, the content and extent of the abnormality should be recorded in the remarks column of the station receipt, and then a document is compiled based on these contents. This document is called the endorsement list.
(5) Shipping order
The bill of lading is a document signed and sealed by the carrier or its agent. It is not only a certificate for consignment of the goods, but also a certificate for notifying the ship to accept the shipment of the carried goods.
(6) Loading list
The loading list is the cargo consigned by the carrier or its agent according to this voyage. The goods of similar nature are classified according to the order of arrival at the port, and then a summary list of loading orders is made.
(7) Bill of lading
The bill of lading is a certificate issued to the shipper or shipper by the container transport operator or its agent after receiving or taking over the goods, proving that the transported goods have been received or loaded on the ship, and are to be transported by sea. The port delivers the goods to the legitimate bill of lading holder. It is also a kind of transportation contract between the transportation company and the owner, which reflects the right of the recorded direction of the goods. It is usually circulated by endorsement, which is a pledge. The main ancillary documents of the remittance bill are divided into the bill of lading and the bill of lading for receipt.
(8) Empty container handover order
The empty container handover form is a document filled out when the shipper uses the shipping company's container, and the shipping company instructs the container custodian to deliver the empty container to the holder of this document.
(9) Guarantee
In the process of container transportation, the carrier’s responsibility is calculated from the time of receiving the goods. Therefore, the goods and container damages that have occurred before the goods are received are recorded in detail on the station receipt, and this record is transferred to the bill of lading. In fact constitutes an unclean bill of lading.
(10) Cargo Consignment Form
A container cargo consignment note is a written certificate issued by the shipper (consignor or freight forwarder) to the carrier or its agent in accordance with the relevant clauses in the first contract and the letter of credit.
In the second half of last year, the rapid recovery of the shipping market caused the “hard to find one container” situation to continue after the beginning of this year-empty containers are still in demand, and some people can't order containers with 10,000 US dollars. On January 8th, at the Hudong Wharf of Waigaoqiao, Shanghai Port, the terminal production has been operating at full capacity recently. In the yard, there are a large number of containers stacked, and the number of heavy containers for storing goods is much larger than the number of empty containers. The industry believes that the shortage of empty containers and the hard-to-find situation of one container will continue for some time.
Where are the empty boxes that you can't get?
Chinese shippers and freight forwarders all over the world "seeking" empty containers, but where did the empty containers go? The answer is simple, it is blocked in other ports.
While the Asian port and shipping industry is desperately desperate for empty containers, although there is a shortage of shipping capacity, price increases can be used to push shipping companies to cancel suspending, refilling, and increase shipping capacity; however, a large number of containers full of cargo are seriously stranded in European and American ports and warehouses. , Unable to move.
A British freight forwarder said, "Our customers are willing to pay such a high freight, but due to port congestion, we are still working hard to move the boxes. Some boxes have been on the dock for more than four weeks and still don’t know what Time to ship."
At the same time, urgently needed empty containers in Asia are scattered in warehouses across Europe, especially in the United Kingdom, where troubled ports have to restrict container delivery to already overcrowded terminals.
The current shortage of containers is a once-in-a-hundred-year problem in the history of global supply chains, and there is basically no solution in the short term. In recent weeks, some container ships sailed from Asia to Europe, but did not return in time, resulting in a serious shortage of empty containers.
A carrier source said: “Due to the insufficient number of containers in the warehouses in China, we have had to reduce the number of recent voyages.” All carriers report that their warehouses are severely lacking the most popular 40-foot tall containers and 40 Foot standard containers, most of the time, even 20 foot containers are in short supply.
The latest container availability index report from Container xChange shows that the availability of the entire China is "still at the lowest level in history." The report added: “Due to the rapid growth in demand after a few months of blank sailing, the current availability rate of 40-foot high cabinets in China is only 0.05 points, compared with 0.63 in the same period last year.” Data above 0.5 indicates surplus, and below 0.5 indicates deficit.
A British freight forwarder revealed that many ocean carriers (shipping companies) now refuse to accept their export bookings until mid-January. "Our customers are ready to pay for these crazy prices, but the ports are blocked. We are still trying to pull the boxes away. He said: “We have some boxes on the dock for more than four weeks, but we still don’t know when they can be unloaded. "
At the same time, urgently needed containers in Asia are scattered in warehouses across Europe, especially in the UK. In the UK, congested ports began to order to restrict containers from being shipped back to already overcrowded terminals.
“The epidemic situation in Europe and the United States still exists, and the labor force in the ports is definitely relatively short, and the speed of customs clearance will slow down. This will prevent the timely unloading of incoming goods and allow the containers that could be turned around to stay abroad for a long time." Yang Li, a retired freight forwarder, analyzed. In addition, since the third quarter, China's export business has increased in volume, which has also intensified the pressure on container demand.
Global container ship freight rates soared by 80%
The lack of containers in the market has led to soaring shipping rates, and the price increase of popular routes is even more exaggerated. Guo Shaohai, head of the International Freight Forwarding Company, said that the freight rate on the same route has doubled in the past six months. For foreign trade companies, production cannot be stopped. It is difficult to ship a large amount of goods with orders, and there is great financial pressure. The industry expects that the shortage of containers and space will continue.
Guo Shaohai said that on May 18, 2020, the sea freight from Shanghai to Long Beach on the West Coast of the United States was US$1,550 for a 40-foot container at that time. It was US$4,500 on January 7 this year.
Yan Xianjie, the sales manager of an international cargo company in Shanghai, said that the price of small cabinets will rise to more than US$4,000 per cabinet in the US West, and the US East small cabinets may have to rise to US$6,000 or 7,000, and there may be no space before the new year. . Prices in Europe continue to increase, and large cabinets may rise to US$9,800, and many customers do not have a cabinet for US$10,000.
The comprehensive index of China's export container freight rate is a "barometer" of price changes in the container transportation market. The latest data from the Shanghai Shipping Exchange show that on January 8, the comprehensive index of China's export container freight rate reported 1,753.85 points, a record high again. The average in May 2020 is only 837.74 points.
"Lianhe Zaobao" reported on January 8 that the COVID-19 pandemic has caused global port congestion and “unavailable containers”, which in turn pushed up ship freight rates soaring by about 80% within two months. The current increase has not faded.
According to the global container freight rate of Drewry, a shipping consulting company, the freight rate per TEU at the end of last year was US$4,359 (approximately S$5752), which is an increase of 75% from the level of approximately US$2500 in October last year. %.
Prior to this, a container shipping company pointed out that the current European route and Mediterranean route freight rates have reached a record high. Although the European route rises later than the US route, the rise is much faster than the US route. On December 11, the freight rate of the western US route was flat at 3948 US dollars/FEU, and the US eastern route was 4804 US dollars/FEU, which increased slightly by 2.2%, which was also approaching a historical high.
Since the fourth quarter of last year, the freight rate of the Far East to Europe route has soared rapidly. In the past two and a half months, it has risen by 152.39%, which is almost three times the difference from the low of US$725 in late April this year. Since September, the freight rate of the Far East to Europe route has exceeded 1,000 US dollars. Due to the difficulty of finding a container in the container shipping market, the rapid increase in the volume of Asian exports to Europe, and the congestion of British ports, the European line freight rate has begun to surge and is expected to exceed 3,000 US dollars this week. .
How to solve the problem of missing boxes
The shortage of containers and the sharp increase in freight rates have attracted the attention of market management departments. China's container production and sales account for 96% of the global market, and it has formed an industrial cluster with full product lines, full supply chains, and full technical capabilities. In this regard, Gao Feng, spokesperson of the Ministry of Commerce, stated at a press conference on December 3, 2020 that he will work with relevant departments to promote increased capacity allocation, support accelerated container return transportation, improve operational efficiency, and support container manufacturers to expand production capacity. . At the same time, it will increase the intensity of market supervision, strive to stabilize market prices, and provide logistics support for the steady development of foreign trade.
After experiencing industry losses in 2019 and a shortage of orders in the first half of 2020, container manufacturers have finally ushered in their own busy moments. According to a source from a large domestic container manufacturer, factory employees now have to trot to go to the toilet and eat lunch for only ten minutes, just to speed up the production progress. "We haven't encountered such a good market in many years. The whole industry is stepping up the production of new boxes, and orders have been scheduled until March next year." He said.
Qingdao CIMC Reefer Container Manufacturing Co., Ltd., located in the Shanghe Demonstration Zone in Jiaozhou, is rushing to make container orders in the workshop. "Starting from the third quarter of 2020, we have been running at full capacity to ensure growth and stable production." The relevant person in charge said that the company will gradually resume orders from the third quarter and make every effort to increase production and ensure supply. This trend is expected to continue until 2021 The first quarter.
However, people in the shipping industry predicted that the shortage of containers will continue until the first quarter of 2021. Therefore, there are already large domestic container companies that dare not rush to take orders for the second quarter of 2021.
Now that the market is in short supply, it is completely possible to launch capacity projects, purchase equipment, and let workers work overtime to produce, but in the long run, this will break the balance of supply and demand in the global container market.
At present, the service life of containers is 10 to 15 years. After the rapid one-time release of production capacity, what about next year or the next year? The development of the industrial chain still requires a long stream of water. Therefore, while moderately increasing production capacity, it is also necessary to work hard on container inventory.
For example, major shipping companies are currently stepping up to empty containers from Europe and the United States. In order to ship European and American empty containers back to Asia as soon as possible, some shipping companies in the European and American markets have tried not to take back the cargo, especially the goods exported from the US inland to Asia. If the US grain is exported in the peak season, the container will cost about in and out of the inland. Two weeks, and the grain is heavy cargo, which affects the loading of ships. In October 2020, the German Hapag-Lloyd shipping company (Hapag-Lloyd) publicly announced that it would suspend the shipping of US soybeans and other US agricultural products in containers.
Industry insiders also pointed out that alleviating the pain of the shortage of shipping containers must tap the potential and expand the capacity of the entire industry chain.
On the one hand, the inventory capacity encourages and supports domestic shipping companies to restore their capacity to the pre-epidemic level as quickly as possible. At the same time, they increase the supply of containers by opening overtime ships, deploying ships from other routes, and seeking charters from the market. Domestic shipping and logistics companies should actively coordinate overseas partners and overseas companies to improve the efficiency of international container turnover. Freight forwarders and shipping companies should actively communicate with them, and do a good job in peak-shift transportation planning and scientific management of space.
Not only that, it is necessary to seek a close connection between railway containers and shipping, allowing containers to circulate between continents, thereby reducing the cost of container use. At the policy level, it is possible to increase subsidies for shipping and land transportation companies for container return, and to issue port exchange coupons and merchant special coupons to export companies to help them reduce their freight burden.
In addition, commerce departments and customs should strengthen the supervision and supervision of shipping companies' freight rates, and conduct timely interviews and financial penalties for improper behaviors such as sudden price increases and arbitrarily asking prices.
